Franchising · Australia
Franchise Agreement Template (Australia)
The Franchising Code was replaced on 1 April 2025, with further obligations from 1 November 2025. A franchise agreement drafted to the old Code is not merely dated — parts of it no longer comply, and some now attract civil penalties.
What this document does
A franchise agreement built to the current Code
A franchise agreement sets the grant, the money and the exit. Under the new Code the exit provisions carry most of the risk: several terms that were routine in agreements drafted to the 2014 Code are now prohibited, and prohibited terms attract penalties rather than merely being unenforceable.
What’s included
Clauses in this template
- Grant, territory and term
- Fees, and the marketing or specific purpose fund with its accounting obligations
- Obligations of both parties, under the good faith overlay
- Supply, systems and brand standards
- Significant capital expenditure, disclosed and discussed
- Termination, including early-termination compensation where required
- End-of-term arrangements and post-term restraint
- Dispute resolution
The law that applies
What changed, and when
From 1 April 2025. The new Franchising Code commenced. A franchise agreement may no longer include a restraint of trade clause that operates where the agreement expires and the franchisee sought to extend or renew it. Civil penalties apply to franchisors who enter into agreements containing such a term.
From 1 November 2025. Franchisors must give franchisees a reasonable opportunity to make a return on their investment. Certain agreements must contain compensation provisions for early termination. Significant capital expenditure must be disclosed and discussed with prospective franchisees. Additional obligations attach to specific purpose funds.
Cooling off. The 14-day cooling-off period continues to apply. Under the new Code a franchisee may waive it in limited circumstances — broadly, where they recently entered a substantially similar agreement with the same franchisor for a substantially similar business.
Good faith. The obligation to act in good faith applies to every aspect of the agreement and cannot be contracted out of.
What goes wrong
Pitfalls we see in practice
An agreement still drafted to the 2014 Code
Most franchise agreements in circulation were settled before April 2025 and carry terms that were unremarkable when they were written. The problem is no longer that they read as dated. Terms the new Code prohibits expose the franchisor to civil penalties on entering into the agreement — so an unreviewed precedent is a live risk every time it is signed, not a housekeeping item for the next renewal cycle.
A post-term restraint that no longer operates
The restraint most franchisors quietly rely on is the one that stops a departing franchisee trading on after the term ends. Where the agreement has expired and the franchisee sought to extend or renew it, that restraint is now prohibited. Franchisors who assume their existing clause still bites are usually relying on precisely the scenario the Code carved out.
No compensation provision where the agreement now needs one
Certain franchise agreements must now contain compensation provisions for early termination. This is not a clause to include if the parties happen to want it. Where it is required and absent, the agreement does not comply — and the gap stays invisible until the franchisor tries to terminate and finds the document will not carry the exit.
Capital expenditure imposed mid-term that was never disclosed
Requiring a franchisee to refit, replace equipment or meet a new brand standard is where franchise relationships sour fastest. Significant capital expenditure must now be disclosed to prospective franchisees and discussed with them. A refurbishment obligation that surfaces in year four, having never been raised, is both a commercial fight and a compliance problem.
Questions
Frequently asked
What changed under the new Franchising Code?
The Code was replaced from 1 April 2025, with a further tranche of obligations from 1 November 2025. The changes with the sharpest edge are the prohibition on certain post-term restraints, the requirement to give franchisees a reasonable opportunity to make a return on investment, compensation for early termination in certain agreements, and disclosure of significant capital expenditure.
Is there a cooling-off period, and can it be waived?
Yes — 14 days. Under the new Code a franchisee may waive it in limited circumstances, broadly where they have recently entered a substantially similar agreement with the same franchisor for a substantially similar business. Outside those circumstances it stands.
Can a franchise agreement still include a post-term restraint?
Not one that operates where the agreement has expired and the franchisee sought to extend or renew it. That term is prohibited, and entering into an agreement containing it exposes the franchisor to civil penalties — so restraints drafted before April 2025 need checking, not assuming.
Legally reviewed by [REVIEWER NAME], practising Australian solicitor — [DATE]. [DRAFT: confirm reviewer and date before publishing.]